AR-Sen: You Don’t Mind If Your Credit Card Rates Go Up, Do You?

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    When Sen. Lincoln scurried back to Washington D.C. following Tuesday’s results, ostensibly it was to fight any attempts to weaken her (wrongheaded) financial reform bill. Apparently, she is so hell-bent on getting her version, and ONLY her version, through that she is willing to vote against pretty much any changes to it, including changes that would seemingly benefit Arkansans.

    You see, up for a vote yesterday was a bill entitled “A Bill To restore to the States the right to protect consumers from usurious lenders.” Seems straightforward enough, right? This bill was proposed by Senator Sheldon Whitehouse (D-RI), and in its original form, it read:

    The amendment is as follows:
    (Purpose: To restore to the States the right to protect consumers from usurious lenders)

    On page 1320 [of the original Dodd bill], strike line 23 and all that follows through the end of the undesignated matter on page 1321 between lines 17 and 18, and insert the following:

    “(g) Transparency of OCC Preemption Determinations. — The Comptroller of the Currency shall publish and update not less frequently than quarterly, a list of preemption determinations by the Comptroller of the Currency then in effect that identifies the activities and practices covered by each determination and the requirements and constraints determined to be preempted.’

    (b) Clerical Amendment. — The table of sections for chapter one of title LXII of the Revised Statutes of the United States is amended by inserting after the item relating to section 5136B the following new item:

    Sec. 5136C. State law preemption standards for national banks and subsidiaries clarified.

    (c) Usurious Lenders. — Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631, et seq.) is amended by adding at the end the following:

    SEC. 141. LIMITS ON ANNUAL PERCENTAGES RATES.

    Effective 12 months after the date of enactment of this section, and notwithstanding any other provision of law, the interest applicable to any consumer credit transaction (other than a transaction that is secured by real property), including any fees, points, or time-price differential associated with such a transaction, may not exceed the maximum permitted by any law of the State in which the consumer resides. Nothing in this section may be construed to preempt an otherwise applicable provision of State law governing the interest in connection with a consumer credit transaction that is secured by real property.”

    The amendment was then amended twice, with the following changes made. First:

    The amendment (No. 3746), as modified, is as follows:

    On page 1320, strike line 23 and all that follows through the end of the undesignated matter on page 1321 between lines 17 and 18, and insert the following:

    “(g) Transparency of OCC Preemption Determinations. — The Comptroller of the Currency shall publish and update not less frequently than quarterly, a list of preemption determinations by the Comptroller of the Currency then in effect that identifies the activities and practices covered by each determination and the requirements and constraints determined to be preempted.

    (b) Clerical Amendment. — The table of sections for chapter one of title LXII of the Revised Statutes of the United States is amended by inserting after the item relating to section 5136B the following new item:

    Sec. 5136C. State law preemption standards for national banks and subsidiaries clarified.

    (c) Usurious Lenders. — Section 5197 of the Revised Statutes of the United States (12 U.S.C. 85) is amended —

    (1) by striking “Any association'” and inserting the following:

    (a) “In General. — Any association”; and

    (2) by adding at the end the following:

    “(b) Limits on Annual Percentages Rates. — Effective 12 months after the date of enactment of this subsection, the interest applicable to any consumer credit transaction, as that term is defined in section 103 of the Truth in Lending Act (other than a transaction that is secured by real property), including any fees, points, or time-price differential associated with such a transaction, may not exceed the maximum permitted by any law of the State in which the consumer resides. Nothing in this section may be construed to preempt an otherwise applicable provision of State law governing the interest in connection with a consumer credit transaction that is secured by real property.

    Second amendment:

    The amendment, as further modified, is as follows:

    On page 1325, between lines 20 and 21, insert the following:

    (g) Transparency of OCC Preemption Determinations. — The Comptroller of the Currency shall publish and update not less frequently than quarterly, a list of preemption determinations by the Comptroller of the Currency then in effect that identifies the activities and practices covered by each determination and the requirements and constraints determined to be preempted.

    (b) Clerical Amendment. — The table of sections for chapter one of title LXII of the Revised Statutes of the United States is amended by inserting after the item relating to section 5136B the following new item:

    Sec. 5136C. State law preemption standards for national banks and subsidiaries clarified.

    (c) Usurious Lenders. — Section 5197 of the Revised Statutes of the United States (12 U.S.C. 85) is amended–

    (1) by striking “Any association” and inserting the following:

    “(a) In General. — Any association”; and

    (2) by adding at the end the following:

    “(b) Limits on Annual Percentages Rates. — Effective 12 months after the date of enactment of this subsection, the interest applicable to any consumer credit transaction, as that term is defined in section 103 of the Truth in Lending Act (other than a transaction that is secured by real property), including any fees, points, or time-price differential associated with such a transaction, may not exceed the maximum permitted by any law of the State in which the consumer resides. Nothing in this section may be construed to preempt an otherwise applicable provision of State law governing the interest in connection with a consumer credit transaction that is secured by real property.

    That’s it. That is the entire amendment. It was an attempt to prevent your credit card company from being able to give a higher interest rate than what is permitted under your state’s usury laws.

    Why Ms. Lincoln (or Mr. Pryor, for that matter) would be against this measure is anyone’s guess; she did not make any comment on the Senate floor during the consideration of the amendment prior to voting against it.  Considering Arkansas has fairly stringent usury laws — see, e.g., the ban on payday lenders — it would seem like this kind of bill would benefit Arkansans as much or more than residents of any other state.  On top of that, a bill that protects credit card customers from obscenely high interest rates will have infinitely more day-to-day impact on the lives of common folk than a bill that reforms a financial instrument that 95% of Americans don’t understand or encounter.